DE30 tests 8,500 pts as bloodbath on stock markets resumes

• Bloodbath on stock markets resumes in spite of rate cuts

• DE30 tests 8,500 pts for the first time since late-2008

• TUI Group (TUI.DE) applied for state aid guarantees

Emergency rate cuts delivered by major central banks failed to shore up market sentiment. Taking a look at European quotation board, one can see that the result was exactly opposite - panic! DAX is trading over 8% lower while French CAC40 drops 0%. Russian indices can be seen as the most resilient in Europe as they drop “only” 4%.

Source: xStation5

Start of a new trading week did not bring relief for the German DE30 and other European indices. The German index tested the 8,500 pts handle for the first time since late-2014 at the beginning of today’s session. Do note that this zone also marks the top of the 2007 bull run. So far bears were unable to make a more decisive break lower but such a scenario cannot be ruled out given significant downward momentum. The next major support can be found another 1,000 pts lower at 7,500 pts handle. The German index is trading almost 40% off the all-time high. Swing area at 9,200 pts is the first resistance to watch should a turnaround occur.

DAX members at 8:47 am GMT. Source: Bloomberg

Infineon Technologies (IFX.DE) agreed to national security concessions in order to win regulatory green light for takeover of Cypress Semiconductor (CY.US). However, due to the nature of the matter, details on the concessions were not disclosed to the public.

According to Automobilwoche, Volkswagen (VOW1.DE) customers are experiencing delivery delays. The German carmaker fails to deliver cars on time as it suffers from production setbacks caused by a coronavirus outbreak. Volkswagen is also considering halting production in Spain and Slovakia.

T-Mobile US (TMUS.US), subsidiary of Deutsche Telekom (DTE.DE), announced that it will close all US shops located within shopping malls starting from Sunday. 

TUI Group (TUI.DE) announced that it has decided to apply for state aid guarantees. The move comes as the company suspended most of its travel operations amid a coronavirus outbreak.  The company wants state aid to help it survive until normal operations are restored. TUI withdrew its guidance for 2020.

Analyst actions

• BASF (BAS.DE) raised to “buy” at Bankhaus Metzler. Price target set at €58

• Daimler (DAI.DE) raised to “hold” at Commerzbank. Price target set at €28

Ongoing market sell-off is not too generous for Deutsche Telekom (DTE.DE). The company is trading nearly 25% YTD lower and nearly 35% below its most recent peak. The stock is testing the support zone at €11.10 at press time and should it break lower, price could drop to as low as €10.00. Source: xStation5